About Me

Since the 1990s I have been very involved with fighting the military "don't ask don't tell" policy for gays in the military, and with First Amendment issues. Best contact is 571-334-6107 (legitimate calls; messages can be left; if not picked up retry; I don't answer when driving) Three other url's: doaskdotell.com, billboushka.com johnwboushka.com Links to my URLs are provided for legitimate content and user navigation purposes only.
My legal name is "John William Boushka" or "John W. Boushka"; my parents gave me the nickname of "Bill" based on my middle name, and this is how I am generally greeted. This is also the name for my book authorship. On the Web, you can find me as both "Bill Boushka" and "John W. Boushka"; this has been the case since the late 1990s. Sometimes I can be located as "John Boushka" without the "W." That's the identity my parents dealt me in 1943!

Saturday, December 29, 2012

Congress is unlikely to look very much at entitlements this
New Year’s weekend as it tries to ponder emergency legislation to avoid the “Fiscal
Cliff”.

It’s important to remember, however, that the biggest
savings in entitlement spending could come from relatively sudden changes.

Reducing the use of “fee for service” and reforms to
discourage unnecessary tests and treatments may reduce costs and do the least
harm to patients (actually leaving patients alone might do some good). But down the road is rationing of procedures
for people over certain ages. “It’s no
longer your turn”.

Means testing on Medicare premiums might be moderately effective,
but about 5% of a seniors pay higher premiums now. And wealthiest healthy seniors might indeed find private plans
(Advantage) cheaper. Republicans say
they want this, but it might deprive Medicare of premium revenue from seniors
who use it relatively less.

On Social Security, the unpleasant and inconvenient truth is
that means testing now even of existing better-off beneficiaries might yield
more savings than gradual changes in retirement age or in cost of living
calculations (the chained CPI debate).

If we really go over the debt ceiling (after “Timocracy”
methods to stave it off for two more months), it could turn out that Social
Security beneficiaries are the first to take the hit after all. That’s because of the 1960 Supreme Court
opinion (Flemming v. Nestor) denies the claim of a “property right” to an
annuity based on contributions, which could lead contractors to sue that they
are first in line. If benefit payments
were missed, they might not be legally recoverable.

One grim and inconvenient possibility is based on a form of “means
testing” already in effect for early retirees, the maligned “Annual Earnings Test”. It could be extended past full retirement
age. It could be extended to incorporate
investment income, other pensions (which are already compromised by the “social
security offset”) or even inherited money, distributed any time within a
reporting year or possibly previous years.
It could take the form of a “2:1” reduction, or even total
exclusion. And unlike the current AET
for early retirees, it would not save rights for future benefits after a later
age.

Means testing could also penalize seniors who did not take
early retirement more. Social Security
has already stopped the privilege of turning in benefits and allowing it to be
restarted later at higher benefit rates.

There are ways for the skies to fall in the first part of
2013, whatever Congress does this weekend.

Friday, December 28, 2012

NBC News has a wicked story from CNBC, by John Carrey, “Death
and (estate) taxes sometimes go together”, link here.

The issue is that, without action by Congress, a death in
2013 will lead to the old inheritance tax threshold of $1 million and a top
rate of 55%.

It could matter to heirs whether a death certificate says
11:59 PM Dec. 31, 2012, or 12:01 AM Jan. 1.
For deaths in 2012, the exemption was 5.12 million.

But Congress has until Dec. 31, 2013 (not 2012) to fix this
problem. It doesn’t have to agree to
anything right now for the Fiscal Cliff.
But families or heirs could be kept in suspense.

My own belief is that, in policy matters, changes should
occur gradually and incrementally to avoid sudden catastrophic discontinuities
which can throw people under the bus. Congress’s practice of defining tables of
threshold amounts for some years and stopping, rather than automatically
indexing them, causes this kind of crisis.
A similar problem exists with the AMT (Alternative Minimum Tax).

Thursday, December 27, 2012

NBC News and CNBC have a primer on how to fix Social
Security – “but it won’t be pretty” or “it may get ugly”, by Allison Linn, link (website url) here.

All the familiar proposals are included, such as raising the
FICA limit, the FICA rate, gradually increasing eligibility age, and using a
chained CPI.

Of course, means testing is mentioned. And almost no one discusses when means
testing starts, only at some point in the future, or even for current
retirees?

There seems to exist a philosophical disagreement as to
whether social security is “insurance” against old age poverty, or whether it
should be a viewed as an annuity related to FICA “premiums” paid. The 1960 Supreme Court ruling on the subject
does not comfort those who made years of contributions already.

A new wrinkle is to dial down benefits for married surviving
spouses (yes, even straight spouses) because two income families are so much more common.

Changes in retirement age might affect poorer people more,
because they don’t live as long. But a chained CPI would affect the very
elderly poor the most.

Tuesday, December 18, 2012

Ed O’Keefe and Dylan Matthews, in an article Monday December
17, 2012, explain (in the Washington Post) how switching the inflation adjustment formula
on Social Security to a “Chained CPI” (or “Chained Consumer Price Index” could
affect beneficiaries. Over time, a
typical beneficiary could see his or her beneficiary check be about 5% less
than it would have been in about ten years.
This could add up for beneficiaries who live a long time. President Obama has proposed compensating
with a slight step-up at age 85. The
Chained CPI reduces inflation rate by assuming people tend to buy generic
brands over time as major brand prices increase, or will migrate to cheaper but similar products (probably not to pigs' knuckles).

There is more to say
the recent discussions of an old Supreme Court ruling that denies a property
right to FICA contributions. When people
and employer pay FICA (or self-employment) taxes, the government uses the taxes
collected to pay current beneficiaries, and has (when there was a surplus) lent
it to other governmental operations.
When new people retire and the government starts paying them benefits,
it must, in a Ponzi-like chain letter, “borrow” from current workers to keep making
payments. People are living longer, and
for a variety of cultural reasons, not having as many children to provide
workers to “loan” the money, although immigration has, until just recently,
made up for some of the gap. In a situation
where the debt ceiling is exceeded, there could a legal case that in fact social security
benefits might not be paid (at least those with other means). I would like to see Congress hire an
insurance annuity contractor (like Vantage) to make the actuarial calculations
and carve out a legal property right for some of the benefits based on
actuarial math.

When people make FICA contributions and expect to be paid back in their own retirement, there's another part of the deal that we miss: providing another generation that is capable of paying us back!

Monday, December 17, 2012

The AARP has a web reference to the “15 Medicare Proposals
You Should Know About” in its “You earned a say” series, here. (See a similar story about Social Security Nov. 27.)

Medicare is generally seen to be a bigger problem in
entitlement budgets that Social Security, and even less of it is covered by
pre-paid special taxes.

It’s easy to see problems with most of the major
proposals. Gradual raising of the
Medicare eligibility age won’t do much to reduce expenses in the short run.
Seniors would have to fend for themselves (or deal with their last employers
and COBRA or retiree policies), but that may be inevitable as lifespans raise.

Since highest income seniors already pay more for Part B and
D supplementals, raising their premiums with means-testing would eat further
into the middle class.

I think there is an opportunity to encourage providers not
to order unnecessary tests. My recent
dental surgery resulting in a biopsy, which was justified by ruling out
malignancy, but probably added $1000 or
so to Medicare’s bill for a test that was largely unnecessary. I think I am prudent in the way I use
services, taking advantage of generics and informing myself of the enormous
volume discounts hospitals and providers can give large insurance companies. I try to ask about prices and competition.
But it is very hard to control what providers insist on doing, even with
relatively healthy beneficiaries. We
need to think seriously about reforming fee for service. Like it or not, health care is a business.

AARP has some petitions for visitors to sign, but I think
that form petition letters are self-serving and ineffective.

Another proposal would be that the government no longer indemnify providers when patients don't make copays.

Thursday, December 13, 2012

I looked some more at the 1960 Supreme Court opinion “Flemming
v. Nestor” at the Court’s reason *see Dec. 3 posting).

The Court noted that Congress set up Social Security through
normal democratic political processes with the intention of its continuing “indefinitely”,
and that to keep it sustainable, Congress needs to be able to adjust it. It also says that voters generally have
understood it as a kind of disability and retirement insurance, not a
contractual annuity.

It also notes that benefit amounts are more closely tied to
earnings (at least they were in 1960) than to FICA contributions themselves (a
notion more relevant during Social Security’s early days), an idea that would
be consistent with a hybrid product. The
concept seems to have been to continue some semblance of a standard of living
that the recipient had earned while working (including that lifestyle for
spouses). It also notes that Social
Security normally limits benefits until full retirement age based on means with
an Annual Earnings Test, which in 1960 could be as late as 72 (I wasn’t aware
of that).

All of this would tend to point to a legal justification to
withholding benefits even from current beneficiaries under a fiscal emergency,
based on means. It is possible to
imagine this happening after a default due to a debt-ceiling excess, or
possibly even as a fallback if there is no Fiscal Cliff solution.

Some members of the GOP and the Heritage Foundation have
sounded cavalier in their public statements, that people like them didn’t “need”
benefits and should give them up. That’s
scary, because that can lead to a dangerous assessment of “need” along any
ground imaginable, a problem well known in libertarian thinking.

It’s not clear how much money is saved by gradually raising
retirement ages for Medicare and Social Security, by further means testing
Medicare premiums (maybe driving more seniors to private plans), or by being less generous with COLA’s. These measures wouldn’t help with short term
deficits or immediate debts. It would be
possible to provide calculations on means testing of current beneficiaries in
different levels, as well as to perform actuarial calculations based on actual
FICA records and scale payments back accordingly. These sorts of numbers should be made known
to the public.

"

Means testing could be based on income (and an obvious,
innocuous place to start is to tax the benefits as ordinary income). A more sinister
idea, well known to people with exposure to the ideology of the far Left a few
decades ago, would be to look at estates or accumulated wealth. Wealth could be inferred from investment
income (that is, non-wage, in contradiction to the Annual Earnings Test which does
not consider investments), or by more intrusive methods, to look at estates
that have been probated or passed in trusts in the last so-many years. This gets the government into areas that most
people (me, at least) would not want it to be.
But that’s another reason why I’m astonished at statements by Lindsay
Graham and others that better-off people should just do without their benefits
in order to help the deficit. That’s a
very slippery slope, that could suddenly become a legal trap for everyone. I think some members of the GOP don’t see
what they’re inviting.

Wednesday, December 05, 2012

ABC News is reporting that spouses of seniors who pass away
after taking out reverse mortgages are sometimes losing their homes if the spouses
are under 62. It appears that the
spouses must come up with the cash immediately or the house can be sold right
out from under them, even after death notices appear in the newspapers.

Monday, December 03, 2012

Here’s an obscure fact for the ABC “Millionaire” game whose
consequences may not be so trivial. The Federal Insurance Contributions Act tax
(FICA), which most wage earners pay to fund Social Security (usually with
employer match), does not confer a “property right” (to use Cato-like,
libertarian parlance) to promised future benefits from Social Security. This point is made in the Wikipedia article
on FICA, well worth reading, link here.

The Supreme Court case that is relevant is Flemming v.
Nestor in 1960, with the Opinion available on FindLaw here.

The Social Security Administration has an informative page
on this matter here.

The
plaintiff had been denied benefits, despite his contributions, in 1954 because
he had been deported and had been a member of the Communist Party. (Yes, in the
1970s, I remember tables from “The Party” right in front of the West 4th
Street Subway station in NYC.)

The Social Security Administration on this page admits that
Social Security benefits are an entitlement, subject to the (political)
determinations of Congress, and not a contractual right or property.

In one sense, that may feed arguments in some circles that
all benefits should be means tested, even for current beneficiaries, in a
fiscal emergency. As far as the Supreme Court is concerned, it is conceivable that future retirees could get zero benefits (especially wealthier ones), even if that is not what we think should happen.

The legal case also has another alarming potential corollary. Should Congress not extend the debt ceiling
(the next deadline is in February, 2013, probably), the treasury could delay or
deny existing benefits, and Social Security beneficiaries, who would certainly
try to sue under class action, could not be guaranteed winning in court (as I
had thought in 2011) because of this precedent. In worst case scenarios, some
benefits could be lost permanently.

In a column in the Washington Post Monday, December 3, 2012
Robert Samuelson argues, on p A19, argues in a column called “Bad-Faith
Bargaining”, orders “Put Social Security on the table – clearly and
irrevocably.” The consequences seem
vague until the end of the piece, where he does argue for gradualism in
changing the inflation-adjustment formula, taxing Social Security benefits as
ordinary income (at least for higher earners), and raising the retirement age
more rapidly than before. His link is
here. I would add that it makes no sense at all to continue the 2% FICA tax "holiday" in 2013 given these problems,

While these incremental changes seem appropriate as part of
a “deal”, I don’t know how effective they will be. I am left with the queasy feeling that my
entire Social Security benefit could be yanked away as part of an emergency
because I seem to have other resources.
Why shouldn’t it be my turn to be unlucky? (I get this out of some of the unwelcome
proposals that people make to me, given their knowledge of my generational
karma.) Any change will stiff some
people.

I do have a “modest proposal”. I would like to see an actuarial calculation
of the benefit that would be paid based on FICA contributions (including employer
match, or the “self-employment” tax explained in the Wikipedia article) had
these “contributions” instead been made to purchase a private annuity from a
life insurance company. One immediate
complication is that life spans increasing, which would make a justifiable
lifetime annuity benefit less. Indeed, private
insurance companies may be finding the rapid increase in longevity (sometimes
with heroic medical tricks) a real challenge for them. Another problem would be that something would
have to be subtracted from the monthly benefit to make up for the fact that in
the 1930s the original beneficiaries had contributed nothing.

I could propose, pass a law that gives me legal contractual
right to that amount and nothing more.
In other words, partially privatize.
Maybe it would go back to being tax free.

Then there is still another problem. There is still a presumption that the
government has “borrowed the money” from me (and, I'm afraid, spent it on other things and just wrote soem IOU's back to Social Security).
A life insurance company has to account for the annuity premiums
collected in a specific way that protects the ownership rights of the
policyowner (hence the word “owner” – and performing these accounting calculations are a very big
deal in life insurance valuation I.T. systems like Vantage -- no wonder that company “rules the world”) Remember, too, that in the insurance world,
some products have “value” (like Whole Life) and other cheaper policies (term)
are really just “insurance”. That
raises still another philosophical question about the intention of FICA
(however regressively it was set up): is it really a premium for a
pseudo-annuity, or is it “insurance” against old age poverty (that is,
welfare). In any case, if we accept the
idea that the FICA tax payment amounts to an annuity premium payment for a “hybrid”
concept (insurance and annuity, which is somewhat progressive anyway in that
lower income retirees do get a little bit of a break compared to typical
annuity payouts), we have to deal with the fact that the government will have
trouble collecting enough “premiums” from current and future workers to pay
back even this actuarial amount owed.
That’s because the birth rate is lower, and also because middle class
wages have not risen properly in recent years.
(Ever since Sandy, “hybrid” has become a bad word.)

Still, I think that doing this calculation and informing all
beneficiaries where they stand now is an important first step to reform. And that reform should include some partial
ownership rights, beyond the reach of politicians.

The Young Turks talk about Boehner’s proposal in 2010 to
stop all benefits to wealthier people, regardless of what they put in:

The FICA (and related self-employment) tax is not an
effective vehicle for helping just the poor in old age. From the way it was set up, it sounds as if
that was not the intention, regardless of the Flemming Supreme Court case in
1960. Responsibility for the elderly poor (who sometimes collect no Social
Security now) is then in some sense a wealth redistribution question that
cannot escape political consequences. It
belongs in the debate of general tax policies, as well as family law (like
filial responsibility laws), and volunteerism.
Admittedly, the problem makes us ask very basic questions about family
and marriage.

The page has a sublink that in turn explains the differences
between Medigap (for people on conventional Medicare) and Medicare
Advantage. The latter replaces the
entire coverage (including prescriptions).
It may well be cheaper for healthy seniors with high incomes who have to
pay higher Medicare premiums under current means testing rules. In that sense, it may well provide some
credibility for Paul Ryan’s proposals to “privatize” Medicare before the
election.

I have been approached, in retirement, a couple times to
sell these products (as well as long term care). I do not want to do this, because if I write
about things (as a journalist) I cannot be partial to one company or one kind
of product. This is a very important
point to me which I will cover again soon.

AARP reports that Medicare Advantage is increasing in sales
and popularity despite Obamacare.

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